Keurig Stock Heats Up As Its Single-Serve Machines Go Cold

Keurig Green Mountain Inc GMCR is best known for its single-serve coffee machines and K-cup hot beverage packets, but all of that could change as the company prepares to launch a cold beverage maker later in 2015.

Single-serve coffee machines have exploded over the past five years with companies like Nestle SA and even Starbucks Corporation launching their own versions of the devices.

Related Link: Keurig Green Mountain Inks Deal With Dr. Pepper Snapple

Changing Home Beverage Service One Cup At A Time

One of Keurig’s main draws in the single-serve business has been its wide variety of K-cups offered through partnerships with well-known brands. Krispy Kreme Doughnuts KKD, Luigi Lavazza S.p.A. and J M Smucker Co’s SJM Folgers brand coffee have all signed on to offer their products in single-serve cups designed for Keurig machines.

The company recently expanded its portfolio to offer tea as well, bringing The Coca-Cola Co’s KO Honest Tea on board.

Hot To Cold Move Isn't A Bad Thing

Now, Keurig is making a move into the single-serve cold beverage market, a place where there are few existing competitors. The machine will allow consumers to make their own carbonated and non-carbonated beverages at home, something just about no other machines on the market can offer.

Sodastream International Ltd SODA, Lifetime Brands Inc's LCUT Cuisinart and NACCO Industries, Inc.’s NC Hamilton Beach all offer carbonated drink making machines, but Keurig’s version will focus more on the single-serve beverage aspect rather than just offering carbonation.

Just like with its hot beverage machine, Keurig is looking to partner with big brands to exclusively offer their drinks in the form of K-cups. This week, the company made an exclusive agreement to include Dr Pepper Snapple Group Inc.’s DPS brands in its lineup of cold beverages. The deal puts Keurig a leg up on competitors who follow the company into the single serve cold beverage market, as it prevents any other machine from dispensing single serve Dr. Pepper brand drinks.

Following the deal, Dr Pepper’s shares gained 1.45 percent and Keurig’s stock rose 4.58 percent. Sodastream’s share price moved in the opposite direction and lost 0.62 percent.